Gaming kicked off the fourth-quarter earnings season with Las Vegas Sands (LVS) CEO Rob Goldstein and fellow top executives shaking down the thunder in one of the most bullish and colorful investor conference calls in recent memory.
The one-liners came fast and furious.
Operations in Macau have not just returned to break-even, they are “way beyond break-even,” COO Patrick Dumont said.
With the reemergence of Asian tourism, “You’ll see the earnings power of Marina Bay Sands” in Singapore, Goldstein proclaimed.
Macau long-term “is tailor-made for what we do,” Goldstein said.
And finally, after a run of table-pounding comments: “If you’re looking for negative comments on Macau, you’re on the wrong conference call.”
Enthusiasm for Macau is not new on LVS calls—what was new was the unbridled expression of the optimism.
The company’s $3.8 billion vowed capital and operating investment over the next decade is not just a “10-year commitment, but a starting point,” Goldstein said.
Investors responded, running up the stock price over 6 percent the next day to $58.37 even as it had doubled from a 52-week low of $28.88. Sell-side analysts, too. Many raised targets into the $60s.
As readers of this space know, we turned bullish on Macau in December, beating the manic run-up that all nine of the U.S.- and Hong Kong-listed Macau casino operator names have enjoyed.
At the time, we said Macau is more of a trade than a long-term commitment, which is a position we maintain. However, we would not be surprised to see the market run up for quite a while and take concession holder stocks along with them. That said, we don’t oppose taking profits here.
But if Goldstein is correct in his enthusiasm, LVS stock may have considerably further to run.
NEW YORK THE NEW SINGAPORE?
Goldstein was especially interested in discussing the company’s proposed casino in Nassau County just east of New York City.
The lone casino license in the New York City area (MGM Resorts at Empire City and Genting Malaysia at Resorts World Aqueduct are expected to snatch the other two available licenses) is “an exceptional opportunity…one and done,” Goldstein said.
He described a project that would be developed in the LVS manner—a $4 billion to $5 billion, full-on resort-casino with convention and other components, “not a regional casino.”
As Goldstein described the impact of such a project, I was reminded of a conversation I had with former LVS COO Bill Weidner as he described the company’s bid for a Singapore license years ago.
The bidding was intense and drew the best companies in the world, but as Weidner described the LVS vision and seeing it through the interests of Singaporeans, I left that meeting thinking his company would be one of the two winners. And it was.
The situation in New York is similar. Great companies are applying with great ideas, but so far, Las Vegas Sands might be the one envisioning it through what New York decision makers want.
It will be a fascinating process to watch.
